As AT&T (NYSE: T) progresses with expanding its U-verse and fiber footprint into more businesses under the Project VIP initiative, it is starting to see near-term and long-term opportunities to get a good return on its investments.
"We're seeing the momentum that gives us confidence and will propel us," said John Donovan, Senior Executive Vice President, AT&T Technology & Network Operations, during the Bank of America Merrill Lynch 2013 Media, Communications & Entertainment Conference. "I do think the benefits get better as you go downstream."
Another aspect of Project VIP is the various synergies it affords for both wireless and wireline networks.
One potential wireline and wireless synergy is being seen with small cell wireless backhaul in areas like Orange County, Calif. where they can leverage ongoing fiber rollouts serving U-verse and local businesses.
"We find things like small cells in Orange County and ask where would we want small cells in Orange County?" Donovan said. "Forty percent of them can be served by U-verse fiber as its backhaul."
While it is being touted as a wireless-based service, Donovan said another service where Project VIP could leverage the strengths of both of its networks is its Digital Life home services offering.
"There are certain synergies that can occur with traditional wireline because operationally it starts with a truck roll, an in-home experience with a trained technician with blue booties on, and it meets high net promoter scores because it was experience in the home," he said. "Those synergies exist in a wireline business where you have excellence at dispatch and maintenance."
Besides network and service synergies, the service provider is finding operational efficiencies in rolling trucks to implement network upgrades, and marketing services to customers.
"Project VIP was really about an integrated capability, and I think that's consistent with the improved capital efficiency of VIP that we announced over the last year," Donovan said. "A move from $66 million as our guidance in capex to $61 million-- that progression is about gaining those efficiencies as an integrated carrier."
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